US STOCKS-Wall Street eyes mixed open as markets digest Big-Tech AI splurge

By Pranav Kashyap and Twesha Dikshit

Jan 29 (Reuters) - Wall Street looked set for a choppy open on Thursday as investors waded through mega‑cap tech results that showcased another surge in AI spending, while the Federal Reserve held rates steady as widely expected.

Meta META.O jumped almost 8.9% in premarket trading as the social media giant paired an upbeat revenue forecast with a 73% jump in this year's capex budget. Tesla TSLA.O rose 1.8% after outlining plans to more than double its capital expenditure to a record level.

Microsoft MSFT.O, however, dropped 6.8% as its cloud revenue failed to impress, stoking fears the hefty outlays behind its OpenAI alliance are not translating into monetization fast enough.

The latest results from three of the so-called "Magnificent Seven" companies suggest investors are willing to overlook massive AI expenditures so long as they expect them to yield tangible returns.

The group - which accounts for about a third of the S&P 500's market value - has powered much of the rally in U.S. equities and remains priced at a premium, leaving investors increasingly sensitive to whether spending momentum is matched by monetization.

"Quite a different story from their earnings last quarter and when you look at the reaction and sentiment, maybe a bit of de-risking going into the print," said Adam Turnquist, chief technical strategist for LPL Financial.

Apple AAPL.O rose 0.6% ahead of its results after markets close.

At 08:34 a.m. ET, Dow E-minis YMcv1 were up 30 points, or 0.06%, S&P 500 E-minis EScv1 were up 14.75 points, or 0.21%, and Nasdaq 100 E-minis NQcv1 were up 29 points, or 0.11%.

EARNINGS CHUG ON

In other notable earnings, Caterpillar CAT.N and Mastercard MA.N added 1.1% and 2.4%, respectively, on posting a higher profit for the quarter.

Defense contractor Lockheed Martin LMT.N rose 4.6% on forecasting 2026 earnings above Wall Street expectations. The sector .SPLRCAERO gained almost 40% in 2025, compared with S&P 500's 16.4% rise.

Southwest Airlines' LUV.N shares rose 6.3% after the airline forecast a stronger-than-expected annual profit.

Bellwether IBM IBM.N jumped 8.8% after beating estimates in its fourth-quarter earnings.

FED DECISION AS EXPECTED

The earnings-driven moves came as the Fed left rates unchanged, giving markets room to focus on tech spending trends.

Chair Jerome Powell said the Fed would be data-dependent, and the upside risks to inflation and downside risks to employment had diminished.

Traders kept their rate‑cut expectations intact, continuing to price the first reduction for June, according to CME's FedWatch tool.

The S&P 500 and the Dow closed virtually unchanged, while the Nasdaq managed only a small uptick.

Initial jobless claims fell to 209,000 for the week ended January 24. Analysts were expecting it to be 205,000.

Meanwhile, U.S. President Donald Trump and Senate Minority Leader Chuck Schumer moved to reach an agreement to negotiate new restrictions on federal immigration agents, potentially averting a government shutdown, the New York Times reported.

The funding deadline is Friday midnight.

Among other stock moves, rare-earth miners slid following a report the Trump Administration would step back from critical mineral price floors.

USA Rare Earth USAR.O fell 8.9%, MP Materials MP.N was down 3.6%, while Critical Metals CRML.O and United States Antimony UAMY.A dropped over 6% each.